DoD's $23M Sikorsky contract for VH replenishment spares faces limited competition, raising value concerns

Contract Overview

Contract Amount: $23,074,967 ($23.1M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-17

End Date: 2027-03-01

Contract Duration: 895 days

Daily Burn Rate: $25.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VH REPLENISHMENT SPARES AND REPAIR OF REPAIRABLES

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to SIKORSKY AIRCRAFT CORPORATION for work described as: VH REPLENISHMENT SPARES AND REPAIR OF REPAIRABLES Key points: 1. Limited competition may lead to inflated pricing and reduced value for taxpayer dollars. 2. The contract's duration and scope suggest a critical need for ongoing support. 3. Reliance on a single source for critical spares can create supply chain vulnerabilities. 4. Performance context is limited due to the 'not available for competition' award type. 5. The aircraft manufacturing sector is complex, with high barriers to entry for new suppliers. 6. Potential for cost overruns exists given the firm-fixed-price contract type and limited competition.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable contract data for VH replenishment spares. The $23.1 million award, while significant, cannot be definitively assessed for fairness without competitive bids. The firm-fixed-price structure offers some cost control, but the absence of competition limits the government's ability to negotiate the best possible price. Further analysis of historical pricing for similar components or services would be necessary to provide a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'not available for competition' basis, indicating that only one source, Sikorsky Aircraft Corporation, was considered capable of fulfilling the requirement. This severely limits the competitive landscape, preventing other potential suppliers from bidding. The lack of a competitive process means the government did not benefit from price discovery mechanisms that typically drive down costs and improve value.

Taxpayer Impact: Taxpayers are likely paying a premium for these critical spares due to the absence of competitive bidding. The government's negotiating power is diminished, potentially leading to higher overall expenditures for essential aircraft components.

Public Impact

The primary beneficiaries are the U.S. Navy's VH helicopter fleet operations, ensuring continued readiness and mission capability. Services delivered include the replenishment of essential spares and repair of existing components, crucial for maintaining aircraft airworthiness. The geographic impact is national, supporting naval aviation readiness across various operational theaters. Workforce implications include continued employment for specialized manufacturing and repair personnel at Sikorsky and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs for taxpayers.
Lack of competition raises concerns about long-term supply chain resilience and potential vendor lock-in.
Dependence on a single supplier for critical spares could lead to vulnerabilities if that supplier faces production issues.
Limited transparency into the justification for sole-source award hinders public scrutiny of procurement decisions.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government, assuming the price was negotiated reasonably.
Sikorsky Aircraft Corporation is a known entity with established experience in manufacturing and supporting these aircraft.
The contract aims to ensure the operational readiness of critical military assets, which is a positive outcome for national security.
The contract duration suggests a strategic approach to long-term sustainment planning for the VH fleet.

Sector Analysis

The aircraft manufacturing sector is characterized by high capital investment, complex supply chains, and stringent regulatory requirements. Contracts for specialized military aircraft components, like those for the VH helicopter, often involve a limited number of qualified suppliers due to the technical expertise and certifications required. Spending in this sector is heavily influenced by defense budgets and modernization programs. Comparable spending benchmarks are difficult to establish without detailed knowledge of specific component costs and market dynamics, but significant government investment is typical for maintaining advanced military aviation capabilities.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized requirements of aircraft manufacturing, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available through this specific award. The focus is on a prime contractor with established capabilities, potentially limiting the direct impact on the broader small business ecosystem unless the prime contractor actively engages them in its own supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods and services at an agreed-upon price. Transparency is limited by the sole-source award justification; however, contract award details are typically made public. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's performance.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Readiness Programs
Helicopter Maintenance and Sustainment
Aerospace Manufacturing Contracts
Military Spare Parts Procurement

Risk Flags

Sole-source award
Potential for inflated pricing
Limited competition
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to SIKORSKY AIRCRAFT CORPORATION. VH REPLENISHMENT SPARES AND REPAIR OF REPAIRABLES

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $23.1 million.

What is the period of performance?

Start: 2024-09-17. End: 2027-03-01.

What is Sikorsky Aircraft Corporation's track record with the Department of Defense, particularly concerning VH helicopter support?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long and established history of supporting U.S. military aviation programs, including extensive work on helicopters. They are the original equipment manufacturer (OEM) for many helicopter platforms, including those likely designated as 'VH'. Their track record with the DoD is generally characterized by significant contributions to fleet readiness and sustainment. However, like any large defense contractor, they have been subject to scrutiny regarding contract performance, pricing, and delivery schedules on various programs. Specific to VH helicopter support, Sikorsky would be expected to possess the proprietary knowledge, tooling, and certifications necessary for manufacturing and repairing critical components, making them a logical, albeit sole-source, provider.

How does the $23.1 million value of this contract compare to similar replenishment spares contracts for military aircraft?

Directly comparing the $23.1 million value of this contract to 'similar' replenishment spares contracts is challenging without access to detailed contract databases and specific component cost breakdowns. The value of such contracts can vary dramatically based on the type of aircraft, the criticality and complexity of the spares, the quantity ordered, and the duration of the contract. For major military aircraft platforms, especially those with extensive operational hours or specialized roles, annual sustainment and spares budgets can run into tens or hundreds of millions of dollars. Given that this contract covers a period of approximately 2.5 years (ending March 2027) and is for 'VH replenishment spares and repair of repairables,' the $23.1 million figure suggests a focused scope, possibly for a specific set of high-value or critical components rather than a comprehensive fleet-wide spares package. Without more granular data on the specific items procured and the competitive environment they were sourced from, a definitive value comparison remains difficult.

What are the primary risks associated with a sole-source award for critical aircraft spares?

The primary risks associated with a sole-source award for critical aircraft spares are multifaceted. Firstly, there is a significant risk of inflated pricing. Without competition, the government loses the leverage to negotiate the best possible price, potentially leading to higher costs for taxpayers. Secondly, it creates a vendor lock-in situation, making it difficult and costly to switch suppliers in the future, even if better alternatives emerge. Thirdly, it can lead to supply chain vulnerabilities. Dependence on a single supplier means that any production issues, financial instability, or strategic shifts by that supplier can directly impact the availability of critical spares, potentially grounding aircraft and jeopardizing operational readiness. Finally, reduced transparency in the procurement process can obscure potential inefficiencies or questionable cost justifications.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this type of specialized military procurement?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs in procurements where the scope of work is well-defined and the risks of cost overruns are relatively low or can be reasonably estimated by the contractor. For specialized military procurement like aircraft spares, FFP provides cost certainty to the government, as the contractor assumes the risk of cost overruns. This incentivizes the contractor to control costs efficiently. However, in a sole-source scenario, the initial 'firm' price might be negotiated from a less competitive starting point. While FFP shifts risk to the contractor, it doesn't inherently guarantee the lowest possible price if competition is absent. The effectiveness hinges on the government's ability to establish a fair and reasonable baseline price through negotiation, supported by independent cost estimates and market research, which is more challenging in sole-source situations.

What are the historical spending patterns for VH helicopter sustainment and spares within the Department of the Navy?

Historical spending patterns for VH helicopter sustainment and spares within the Department of the Navy would likely show consistent, significant investment over the lifecycle of the aircraft platform. Sustainment costs, including spares, maintenance, and support services, typically represent a substantial portion of the total ownership cost for military aircraft. For a platform like the VH helicopter, which implies a heavy-lift or specialized utility role, spending would be driven by operational tempo, fleet size, component reliability, and planned obsolescence. Annual expenditures can fluctuate based on major maintenance cycles, upgrades, or unforeseen component failures. Without specific data on the VH platform's historical sustainment budgets, it's reasonable to infer that spending would be in the multi-million dollar range annually, reflecting the complexity and operational demands placed on such assets. This current $23.1 million contract appears to be a component of that ongoing sustainment effort.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001922R0040

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 6900 MAIN ST, STRATFORD, CT, 06614

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,074,967

Exercised Options: $23,074,967

Current Obligation: $23,074,967

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $3,369,263

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001923D0011

IDV Type: IDC

Timeline